Ingenious 1 Limited v Shaikh
[2025] NZHC 169
•14 February 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-002274
[2025] NZHC 169
BETWEEN INGENIOUS 1 LIMITED
Appellant
AND
SALIM AHMED SHAIKH
Respondent
Hearing: 11 February 2025 Appearances:
G Jindal for Appellant Respondent in Person
Judgment:
14 February 2025
JUDGMENT OF LANG J
[appeal against refusal to grant summary judgment and leave to apply for summary judgment out of time]
This judgment was delivered by Justice Lang On 14 February 2025 at 11.30 am
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
Solicitors/counsel:
Ormiston Legal, Auckland
Copy to:
The Respondent, Mr S A Shaikh
INGENIOUS 1 LTD v SHAIKH [2025] NZHC 169 [14 February 2025]
[1] This appeal arises out of a series of transactions undertaken between the respondent, Mr Salim Shaikh, and one of his former friends and business associates, Mr Habeeb Syed.
[2] Between the latter part of 2022 and mid-2023, Mr Syed made a series of advances to Mr Shaikh. During the same period Mr Shaikh made some repayments. The terms on which the various advances and repayments were made are in dispute. This dispute forms part of a wider dispute that has developed between Mr Shaikh and Mr Syed. This has culminated in several separate proceedings filed in this Court.
[3] Mr Syed subsequently assigned his interest in the recovery of the advances to the appellant, Ingenious 1 Ltd (Ingenious). Ingenious issued proceedings in the District Court seeking recovery of the amount it alleges remains outstanding by Mr Shaikh. After Mr Shaikh filed and served his statement of defence, Ingenious applied for summary judgment for the amount allegedly outstanding. However, the application was filed out of time. Ingenious was therefore required to file a separate application seeking leave to file the application for summary judgment out of time.
[4] In a judgment delivered on 22 August 2024, Judge J Bergseng declined both the application for leave and the substantive application for summary judgment.1 Ingenious appeals both aspects of the Judge’s decision.
Preliminary issue: representation
[5] In the District Court, Ingenious was represented by a barrister, Mr Tim Rea. At the hearing of the appeal, however, it was represented by Mr Gautam Jindal. Mr Jindal is employed by the solicitors on record for Ingenious on the appeal.
[6] Mr Jindal provided an affidavit in the District Court to explain the reasons why Ingenious did not file its application for summary judgment within the time prescribed by the District Court Rules 2014. His affidavit provided the following information:
1 Ingenious 1 Ltd v Shaikh [2024] NZDC 20194.
I am the solicitor on record in this matter.
I was suffering from a severe medical condition in the months of November 2023 and December 2023. I had to visit the Emergency Department of Auckland Hospital at Grafton and at Middlemore several times between these months.
I was put on urgent surgery list on 18 Dec 2023. I underwent surgery on 20 Dec 2023 and was discharged 21 Dec 2023. I fully recovered in the 3rd week of January 2024.
Copies of relevant medical records are marked & annexed as A.
The statement of defence was filed by the defendant on 06 December 2023. I was waiting for the statement of defence to be filed before I proceeded to summary judgment as I wanted to know what defences were raised before the plaintiff proceeded to summary judgment.
Due to my medical condition, I could not file the summary judgment application within the required 10-day time frame. I filed the summary judgment application on 23 January 2024, as soon as I was back at work.
[7] Mr Shaikh challenged Mr Jindal’s assertions that his medical conditions prevented him from filing the application for summary judgment within the required time. He produced evidence to show that Mr Jindal remained active in providing Ingenious with legal advice in relation to several proceedings in this Court during the period when he was allegedly suffering from significant medical issues. Mr Shaikh therefore challenged the factual basis on which Ingenious advanced its application for leave.
[8] Given that Mr Jindal’s evidence on this issue remains subject to challenge, I consider it was inappropriate for him to appear as counsel for Ingenious on the appeal. In this context, I refer to observations made in Kooky Garments Ltd v Charlton.2 In that case, Thomas J noted that it was a matter of “grave concern to the Court” where representatives of law firms appear for clients in circumstances where there is an actual or potential conflict of interest.3 As Thomas J observed, in such situations the law firm will effectively be defending its actions or advice. This leads to the risk that “the client will not be represented with the objectivity and independence to which the client is entitled and which the Court demands.”4
2 Kooky Garments Ltd v Charlton HC New Plymouth AP 21/92, 23 September 1993.
3 At 13.
4 At 14.
[9] That is the position that has arisen in the present case. However, the present appeal has already delayed the progress of the proceeding in the District Court for a considerable period. The sum in dispute is also not large. For those reasons I propose to determine the appeal notwithstanding the irregularity that has occurred in relation to the issue of Ingenious’ representation.
Amendment of the claim
[10] At the hearing in the District Court, counsel for Ingenious made an oral application to amend the statement of claim to include a pleading based on an assertion that there was no enforceable contract between Mr Shaikh and Mr Syed. The Judge noted that this was based on Mr Shaikh’s evidence that the advances were made on an interest free basis.5 This meant that the advances constituted a “gratuitous” loan advanced in the context of the friendship that existed at that time between Mr Syed and Mr Shaikh.
[11] The Judge ultimately did not rule on the application so the claim remains in its original form. The statement of claim alleges that the parties entered into a contractual arrangement under which Mr Syed advanced monies to Mr Shaikh on the basis that Mr Shaikh would repay them at a given time. Issues relating to the provision of consideration, a matter of considerable focus in Mr Jindal’s submissions, do not arise.
Should the Judge have declined leave to file the application for summary judgment out of time?
[12] Rule 12.4(2) of the District Court Rules requires any application for summary judgment to be filed either with the statement of claim or not later than ten working days after the defendant serves its statement of defence on the plaintiff. Any application filed outside that period requires the leave of the Court.
[13] Neither party disputes the Judge’s conclusion that the last day on which Ingenious could file an application for summary judgment without leave was 20 December 2023. The application and supporting affidavit were not filed
5 Ingenious 1 Ltd v Shaikh, above n 1, at [39].
until 5 March 2024. This means they were filed approximately two months out of time.
[14] The reasons for the Judge’s decision to decline the application for leave are as follows:6
[49] The plaintiff elected to proceed by way of ordinary proceeding, alleging a breach of contract. Mr Shaikh’s statement of defence was to acknowledge receipt of an advance of $68,000 from Mr Syed and at the same time to seek further particulars from the plaintiff of the terms and conditions of the claimed loan. As Mr Shaikh says, he had requested further particulars regarding the plaintiffs claim because the statement of claim had not said what the particulars were:
The plaintiff took an assignment of the benefit of the loan from Habeeb Ur Rahman Syed. While the plaintiff does not say so, it appears to be unaware of the actual terms of the loan. I wished to know what the plaintiff said those terms were before I responded as I do not trust Mr Syed or the plaintiff.
[50] Mr Shaikh’s statement of defence, while acknowledging the advance, proceeds on the basis that he is unable to respond to the plaintiff’s claims without the particulars sought, namely the alleged terms of the loan, whether any agreement to repay was express or implied, details of the alleged demand for repayment and details of the alleged short duration of the advance. Additionally, Mr Shaikh was unable to respond to the claim of an assignment of the loan to the plaintiff.
[51] There is nothing in Mr Shaikh’s statement of defence which should have indicated to the plaintiff that summary judgment was an appropriate application. The plaintiff simply seized on Mr Shaikh’s acknowledgment of receiving the advance and ignored the specific points raised by Mr Shaikh in respect of the plaintiff’s claim of breach of contract.
[52] Ms Jindal’s affirmation, filed in support of summary judgment, that she believes there is no defence to the plaintiff’s claim, fails to mention the statement of defence or the request for further particulars. It fails to acknowledge that the defendant has accepted that the money had been advanced, but the terms of the advance were disputed.
[53] Mr Jindal’s affidavit in support of the application to proceed out of time also fails to advance any reason as to why summary judgment was thought to be appropriate in the circumstances of these proceedings. He fails to acknowledge Mr Shaikh’s defence or his request for further particulars.
[54] The evidence in respect of Mr Jindal’s health is that he was admitted to hospital 29 November 2023 at 3.09 pm and discharged four hours later.
6 Footnotes omitted.
There was a further attendance at hospital on 18 December 2023 for approximately five hours with a planned theatre admission on 20 December 2023. Mr Jindal was admitted to hospital 20 December 2023 and discharged the following day. Apart from establishing the times Mr Jindal was in hospital, he does not go on to explain why his medical condition prevented him from filing the summary judgment application.
[55] Against Mr Jindal’s time in hospital is Mr Shaikh’s undisputed evidence that over this time period Mr Jindal was corresponding with Mr Shaikh’s lawyers regarding these and other proceedings involving the same parties.
[56] Accordingly, I decline the plaintiff’s application for leave to proceed by way of summary judgment. To grant its application would, in my view, be contrary to the objective of the DCR, securing the just, speedy and inexpensive determination of any proceeding. The plaintiff, having been served with Mr Shaikh’s statement of defence and application for further particulars has failed to consider or respond to the issues raised by Mr Shaikh. The plaintiff’s evidence, that there is no defence to its claim, has not been considered against the issues raised by Mr Shaikh’s response to its proceedings. It is difficult to understand the claim there is no defence given the subsequent affidavits the plaintiff has filed and then at hearing, abandoning its primary sole cause of action of breach of contract.
[15] Like the Judge, I do not find Mr Jindal’s evidence as to why the application for leave was not filed within the required timeframe to be convincing. He does not explain why issues raised in Mr Shaikh’s statement of defence meant that it was appropriate to apply for summary judgment. Further, his medical issues do not appear to be so debilitating as to have prevented him from complying with the time limits prescribed in the District Court Rules. Nor does he explain why he did not at least file a pro forma application for summary judgment within the prescribed time even if his medical issues prevented him from filing an affidavit in support of the application.
[16] Further, Mr Jindal’s medical issues do not appear to have been so debilitating as to have prevented him from complying with the time limits prescribed in the District Court Rules. All of these matters suggest that the Judge was justified in declining to grant leave to apply for summary judgment out of time.
[17] However, there is no evidence that Mr Shaikh was prejudiced by the late filing of the application. The delay that occurred is also not particularly long given that the period between 20 December and 5 March included the Christmas break.
[18] I therefore consider that the decisive factor in considering where the interests of justice lay in the present case was the strength of the application for summary judgment. If Ingenious could show that it was entitled to summary judgment on even part of its claim, the Judge should have granted leave notwithstanding the late filing of the application.
Should the Judge have declined the application for summary judgment?
[19] The Judge was not prepared to enter summary judgment against Mr Shaikh because he did not consider the case was appropriate for the summary judgment procedure.7 In part he was influenced in this conclusion by the fact that bank statements produced by an employee of Ingenious in the affidavit filed in support of the application for summary judgment differed from those produced in a subsequent affidavit by Mr Syed.8
[20] The Judge was also influenced by disputes relating to the factual basis for the loans, the amounts advanced, the amounts repaid and the other terms of the loan arrangement.9
[21] One potential obstacle to the application for summary judgment in the present case was the fact that the terms on which the various advances and repayments were made were never recorded in writing. To the extent that the terms exist, they must be ascertained from the oral discussions that took place between Mr Shaikh and Mr Syed during the relevant period. That is not a promising start for Ingenious, because Mr Shaikh disputes the timeframe within which he acknowledges he was required to repay the advances. Ordinarily that would require both Mr Shaikh and Mr Syed to give evidence at trial so that the Court could resolve the dispute based on its findings as to credibility and reliability.. However, Mr Jindal submits that the transactions disclosed by the parties’ bank statements enable the Court to determine that the appeal should succeed.
7 At [64].
8 At [63].
9 At [64].
[22] Importantly, however, it appears to be common ground that Mr Syed made advances to Mr Shaikh totalling $68,000 in three tranches between 29 September and 18 October 2022. At this time Mr Shaikh was acquiring a new business and needed funds to complete the purchase. During this period Mr Syed was working in the business and he says he initially believed that he was advancing funds to obtain a shareholding in that company. However, an argument occurred on 23 October 2022 when Mr Syed realised that Mr Shaikh was not going to provide him with a shareholding in the company.
[23] Mr Syed says that this led him to demand repayment of the funds that he had paid to Mr Shaikh. He says Mr Shaikh promised to repay those sums within six months. He then repaid the sum of $8,000, by way of two payments in the sum of
$4,000 each, on the same day. He then repaid further smaller sums over the next eight months. However, Mr Syed says that he subsequently made further advances to Mr Shaikh during the same period to assist him with business expenses. These totalled $33,000. He says that, because of the difficulty in determining what was owing at any given time, the parties met on or about 1 March 2023 and agreed that the sum of $80,000 was owing as at that date.
[24] Mr Syed says that a further disagreement occurred on 18 May 2023 that led to Mr Shaikh terminating his employment. Thereafter he says that Mr Shaikh made no further repayments.
[25] Mr Shaikh has a different view. He says that, of the sum of $68,000 that Mr Syed advanced, he repaid a total of $43,600. This leaves a balance owing of
$24,400. Mr Shaikh describes the terms on which the initial advances were made as follows:
I cannot recall the exact date, but in September 2022, Mr Syed invited me out for coffee at Café Baklava in Mt Roskill. He said he wanted to discuss my new business with me but did not tell me what exactly he wanted to discuss.
When I met him at the café, he told me that he could borrow $60-$70K from his brother in Saudi Arabia to help me with my new business. I agreed to borrow from him but asked when I would have to pay this back by. Mr Syed told me that I would have at least two years to pay it off. We never put this into writing and so it was an oral agreement but the intent and understanding
was for the amount lent to me to be a term loan where final repayment was to be made no earlier than September 2024.
…
Therefore, my position, assuming the plaintiff is claiming that the loan was repayable upon demand, is that the remaining $24,400 is not due till at least September 2024.
[26] The bank statements produced by Mr Syed in the District Court demonstrate that Mr Syed advanced a total sum of $101,000 to Mr Shaikh. These comprise the initial advances of $68,000 together with subsequent advances totalling $33,000. Mr Shaikh has never disputed Mr Syed’s evidence that he made further advances totalling $33,000 after 23 October 2022. However, as he points out, the assignment of the debt to Ingenious related only to the original advances totalling $68,000. It did not refer to the subsequent advances totalling $33,000. On the evidence available to the Court, I am therefore satisfied that Ingenious has failed to prove that it has been assigned the right to recover the subsequent advances.
[27] The bank statements produced by Mr Shaikh and Mr Syed show that Mr Shaikh paid Mr Syed the sum of $43,400. Of this sum, Mr Syed contends that one payment, in the sum of $2,600, was made for a purpose other than repayment of previous advances. It is obviously not possible to resolve that dispute in the present context. Mr Shaikh must therefore be given the benefit of the doubt regarding the nature of that payment.
[28] Mr Jindal submits that the fact that Mr Shaikh continued to repay Mr Syed sums of money between October 2023 and May 2024 is inconsistent with his claim that the advances were not due for repayment until September 2024. He also points out that Mr Shaikh’s evidence regarding the repayment date could apply to the advances made after 23 October 2023.
[29] I accept these arguments. I consider it significant that Mr Shaikh immediately repaid Mr Syed the sum of $8,000 on 23 October 2022 when the first argument occurred. By that date Mr Syed had not made any of the subsequent advances. Mr Shaikh must therefore have made the payments on 23 October 2022 in part
repayment of the initial advances. It is highly unlikely that it was an early payment made voluntarily as Mr Shaikh contended in a reply affidavit filed in the District Court.
[30] It is also noteworthy that Mr Shaikh made a further payment in the sum of $1,000 to Mr Syed on 26 October 2022. This must also have been made in reduction of the original advances because Mr Syed did not make the first of the subsequent advances until 28 October 2022. Thereafter Mr Shaikh continued to make payments totalling approximately $34,000 even though, on his version of events, he was not legally obliged to do so. I consider this to be highly unlikely.
[31] I consider that after 23 October 2022 Mr Shaikh’s actions in progressively repaying the debt show that he knew he was liable to repay the initial advances totalling $68,000. I am satisfied Mr Shaikh’s evidence that he was not required to repay the advances until September 2024 is not tenable.
[32] It follows that Ingenious was entitled to obtain summary judgment against Mr Shaikh in the sum of $24,400, being the amount of the original advances ($68,000) less the repayments made by Mr Shaikh ($43,600).
Result
[33] The appeal is allowed. I grant Ingenious leave to file its application for summary judgment out of time. I also enter summary judgment against Mr Shaikh in the sum of $24,400 together with interest to be fixed in accordance with the Interest on Money Claims Act 2016. Interest is to be payable on the outstanding balance of the initial advances as from 28 September 2023, being the date on which Ingenious gave Mr Shaikh notice of the assignment of the debt and demanded repayment.
Costs
[34] Ingenious is entitled to costs on the appeal calculated on a category 2B basis together with disbursements as fixed by the Registrar. If the parties cannot reach agreement, they may file memoranda as to costs and I will determine costs on the papers. Memoranda are not to exceed three pages in length.
[35]Costs in the District Court are to be fixed by that Court.
Lang J
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